Diversification in activities: between consolidation and momentum

The tours and activities industry is among those that have been hit hardest by the COVID-19 lockdowns.

However, the effects on certain sub-sectors or individual providers are just as differentiated as the subsequent development of the entire industry. This is because, unlike other crises caused by economic factors, demand for tours, activities and attractions did not and will not decline, and thus is not a general problem for this market.

Lockdowns are an "artificial block of demand," since the demand is still there, but cannot play out. Now that the lockdowns are over, the demand will kick back in. Operators, who are best prepared for that, will benefit the most. 

There is a spectrum

If we first take a closer look at which sub sectors of the tours and activites industry were affected, we find that many outdoor operators had a pretty good summer, while nearly all indoor operators suffered year-round.

Combine this view with the differences surrounding how suppliers adjusted to the lockdown, how actively they dealt with the outcomes, how creative they were, and how they were able to develop new revenue streams, then the picture changes again. 

The spectrum ranges from creative, active operators with at least some form of business open during the summer to operators who unfortunately were unable to build alternative business models and were forced to go out of business.

Much of the difference between staying in business and going out of business was technical, such as the use of a booking system, timeslot tickets or the ability to quickly automate and implement less stringent cancellation policies. Other important factors were flexibility, such as switching to online versions or operating test centers, and focusing on new target groups, particularly domestic and specific regions.

Redistribution of market potential

In the macrocosm of the experience industry, the consequences of the lockdown are now creating a whole range of effects. On the one hand, it has never been more advantageous to secure market share, exclusive access or simply attractive inventory through acquisitions of companies in the tours, activities and attractions sector.

Examples include GetYourGuide's purchase of Guidatours or Hornblower Group's acquisition of Walks and Shoretrips. Here, the market will continue to consolidate, and we will very likely see more moves of this nature in the coming months.

At the same time, and a bit counterintuitively, there is a vacuum in the industry resulting from an economic downsizing or elimination of experience offers, while demand is higher than it was before the lockdown due to catch-up effects. In other words, space has opened up for new businesses and granted more room for existing businesses to expand.

Furthermore, demand has never been so “online.” In the past, newcomers had to invest a lot of time in building an offline reseller network, but with the support of digital booking and distribution solutions from technology providers, the "time-to-market," investment and manpower requirements for startups are reduced to a new minimum.

This is creating real momentum at the moment. 

Time to find the right experts

In the course of lockdown-related business closures or in the context of market consolidation, many committed and creative minds have moved to other areas or are currently about to return to the tours and activities industry - a know-how potential ready to be called upon.

Those companies that also invest in recruitment and retention of qualified employees at an early stage will be able to additionally strengthen their market position. Especially as the situation continues to ease, the entire tourism sector will normalize and qualified personnel will become scarce again. 

Crisis creates opportunity

Tours, activities and attractions are experiencing a rapid recovery, but will continue to differ significantly as a sector compared to what it was in 2019.

Activities take place with smaller groups and increasingly outdoors when possible, are predominantly oriented towards regional target groups and often come with a higher price tag due to the higher demand.

Those in this market environment with an entrepreneurial spirit will find lower barriers to entry, more untapped potential and a greater thirst for experiences than ever before.